00:01
We're going to be looking at an analysis of perfect competition in terms of the beneficiaries of the system, whether it is the consumers or the producers who are likely to benefit the most.
00:20
Now, we do have an opportunity to explain this by using graphs in perfect competitive market.
00:30
Where we have a downward sloping demand curve and we have an upper slopping supply curve.
00:40
We understand that in this particular market, the price is determined by the market forces.
00:46
So price, the interaction of supply and demand determines the price.
00:52
So in a perfectly competitive market, if this is the industry or the market, the individual equilibrium can best be explained by a perfectly elastic demand curve.
01:12
So the firm becomes a price taker if we're going to be having revenues and costs in an analysis of the individual firm.
01:22
And this is going to be the aggregate, i mean the average revenue as well as the marginal revenue curve.
01:29
So price and perfect compare.
01:31
Of market is equal to the average revenue as well as the marginal revenue curve.
01:36
And if you are to draw up the competition, you will see that the average total cost curve actually customers, not cost curve at its lowest.
01:53
And if you are going to look at the profitability here by using the blue ink, you notice that production is, or, that, as at mc is equal to mr that's where the perfect the profit maximization level of production is so all this will be profits in the short run now in a perfectly competitive market these profits actually attract more competitors in the market and wipe out the profitability so you would expect the prices to decrease if the first one there is p o then there you'll expect the price to decrease to p1 to wipe out the profits of the perfect competitor in the short run...